MANAGING SMALL BUSINESS ASSOCIATIONS READER

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1 MANAGING SMALL BUSINESS ASSOCIATIONS READER Cambodia 2007

2 Copyright International Labour Organization 2007 Publications of the International Labour Office enjoy copyright under Protocol 2 of the Universal Copyright Convention. Nevertheless, short excerpts from them may be reproduced without authorization, on condition that the source is indicated. For rights of reproduction or translation, application should be made to the Publications Bureau (Rights and Permissions), International Labour Office, CH-1211 Geneva 22, Switzerland. The International Labour Office welcomes such applications. Libraries, institutions and other users registered in the United Kingdom with the Copyright Licensing Agency, 90 Tottenham Court Road, London W1T 4LP [Fax: (+44) (0) ; cla@cla.co.uk], in the United States with the Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA [Fax: (+1) (978) ; info@copyright.com] or in other countries with associated Reproduction Rights Organizations, may make photocopies in accordance with the licences issued to them for this purpose. Managing Small Business Associations - Reader ISBN (print) ISBN (web pdf) The designations employed in ILO publications, which are in conformity with United Nations practice, and the presentation of material therein do not imply the expression of any opinion whatsoever on the part of the International Labour Office concerning the legal status of any country, area or territory or of its authorities, or concerning the delimitation of its frontiers. The responsibility for opinions expressed in signed articles, studies and other contributions rests solely with their authors, and publication does not constitute an endorsement by the International Labour Office of the opinions expressed in them. Reference to names of firms and commercial products and processes does not imply their endorsement by the International Labour Office, and any failure to mention a particular firm, commercial product or process is not a sign of disapproval. ILO publications can be obtained through major booksellers or ILO local offices in many countries, or direct from ILO Publications, International Labour Office, CH-1211 Geneva 22, Switzerland. Catalogues or lists of new publications are available free of charge from the above address, or by pubvente@ilo.org Visit our website:

3 MANAGING SMALL BUSINESS ASSOCIATIONS READER Cambodia 2007

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5 Table of Contents TABLE OF CONTENTS PREFACE...5 ACKNOWLEDGEMENTS INTRODUCTION WHY BUSINESS ASSOCIATIONS ARE IMPORTANT THE PURPOSE OF THE READER GOVERNMENT AND DEVELOPMENT AGENCIES' INTEREST IN BUSINESS ASSOCIATIONS...8 MODULE 2: THE NATURE OF BUSINESS ASSOCATIONS REASONS FOR CREATING A BUSINESS ASSOCIATION DIFFERENT TYPES OF BUSINESS ASSOCIATIONS ASSOCIATIONS OF WOMEN ENTREPRENEURS UNDERSTANDING SOCIAL CAPITAL...12 MODULE 3: DEVELOPING A SMALL BUSINESS ASSOCIATION LIFE CYCLE OF THE BUSINESS ASSOCIATION MEMBERSHIP STRATEGY STRATEGY ON FEDERATIONS, UNIONS AND NETWORKS GROWING PAINS MODULE 4: THE ASSOCIATION MISSION STATEMENT AND OBJECTIVES VISION OF THE ORGANIZATION MISSION STATEMENT SETTING THE OBJECTIVES MODULE 5: THE ASSOCIATION CONSTITUTION THE CONSTITUTION RIGHTS AND OBLIGATIONS OF MEMBERS MODULE 6: ENCOURAGING PARTICIPATION KNOWING THE MEMBERS FACILITATING MEMBER'S PARTICIPATION WOMEN IN BUSINESS ASSOCIATIONS MODULE 7: LEADERSHIP THE IMPORTANCE OF GOOD LEADERSHIP LEADERSHIP STYLES SPECIFIC LEADERSHIP PROBLEMS...26 MODULE 8: COMMUNICATION EFFECTIVE COMMUNICATION BLOCKS TO COMMUNICATION IMPROVING COMMUNICATION ORGANIZING A MEETING

6 Managing Small Business Associations - Reader MODULE 9: DECIDING ON THE BUSINESS ASSOCIATION'S SERVICES COMMON SERVICES OFFERED BY BUSINESS ASSOCIATIONS DECIDING ON THE BUSINESS ASSOCIATION'S SERVICES LEVEL OF IMPLEMENTATION CONTRACT THE SERVICES OUT BUSINESS ADVICE AND CONSULTANCY TRADE PROMOTION AND MARKET DEVELOPMENT TRAINING SOCIAL SERVICES MODULE 10: DELIVERING COMMERCIAL SERVICES IMPROVING COMPETITIVENESS COMMON COMMERCIAL ACTIVITIES BUSINESS LINKAGES JOINT MANAGEMENT OF PREMISES AND EQUIPMENT...44 MODULE 11: DELIVERING ADVOCACY SERVICES LOBBYING AND ADVOCACY: PREPARING A CAMPAIGN DIALOGUE AND CONSULTATION LOBBYING FOR GENDER-FRIENDLY LEGISLATION MODULE 12: RESPONSIBILITIES AND TASKS WITHIN THE ASSOCIATION ROLES AND RESPONSIBILITIES OF THE DIFFERENT PARTS OF THE ASSOCIATION DECISION MAKING JOB DESCRIPTIONS...52 MODULE 13: MANAGING ASSOCIATION FINANCES THE IMPORTANCE OF GOOD FINANCIAL MANAGEMENT THE BUDGET THE CASH FLOW FORECAST THE CASH BOOK AND LEDGER..., FINANCIAL STATEMENTS MEMBERSHIP ADMINISTRATION AUDIT PROCEDURES MODULE 14: SOURCES OF REVENUE INTERNAL AND EXTERNAL SOURCES OF FUNDS HOW TO PRESENT YOUR BUSINESS ASSOCIATION THE PROJECT PROPOSAL MODULE 15: REGISTERING YOUR BUSINESS ASSOCIATION IN CAMBODIA GOVERNMENT GUIDELINES THE BENEFITS OF OFFICIAL REGISTRATION MODULE 16: GROWTH AND OUTREACH SWOT ANALYSIS STAKEHOLDER ANALYSIS THE STRATEGIC PLAN...67 ANNEX A: EXAMPLE CONSTITUTION OF A CAMBODIAN BUSINESS ASSOCIATION (UNOFFICIAL TRANSLATION) ANNEX B: PROCEDURES FOR REGISTERING THE CONSTITUTION OF A BUSINESS ASSOCIATION (UNOFFICIAL TRANSLATION)

7 Preface Preface The Royal Government of Cambodia recognizes small enterprise development as a key strategy for poverty reduction and economic growth. Small enterprises create jobs for large numbers of women and men, they support the national economy and they meet a broad range of consumer demands. Small business associations can potentially contribute a lot to the development of the small enterprise sector. A small business association is a voluntary alliance between small enterprises. It acts on behalf of its member businesses, protecting their interests and offering much-needed business development services. Business associations can help their members to increase their competitiveness and to grasp opportunities in the market place. Small business associations are an indispensable means for developing a market economy. To date there is a limited number of business associations in Cambodia. Those that exist do not always operate in a very business-like fashion. Only a few of them have been able to carry out the two basic functions of an association: to be a representative voice and to provide business support services. In general their representative voice is weak, and does not contribute to policy formulation. Their support services do not always meet the needs of their members. Almost all business associations are lacking the necessary human and financial resources to have a real impact. This reader on "Managing Small Business Associations" gives guidance on how to build strong and efficient business associations that respond to the needs of both men and women entrepreneurs. It introduces topics that are essential for existing business associations as well as for entrepreneurs that want to start up a new association. 5

8 Managing Small Business Associations - Reader Acknowledgements This reader is based on materials prepared by the In-focus Programme on Small Enterprise Development (IFP/SEED) of the International Labour Organization (ILO). Between 1995 and 2005, the ILO studied the work and structures of business associations in various countries and identified the key issues that make for success when entrepreneurs work together. The reader was conceived and coordinated by Mr. Kees van der Ree of IFP/SEED. Important inputs, especially on the gender equality aspects of association building, were received from Mr. Gerry Finnegan of IPF/SEED. The reader was adapted for use in Cambodia by a group of consultants led by Ms. Heng Seltik, National Project Coordinator of the ILO Project "Promoting Women's Entrepreneurship Development and Gender Equality (WEDGE)", Mr. Sok Somith, National Project Coordinator of the ILO project "Integrated Support to Small Enterprises in Mekong Delta Countries (ISED)", Mr. Puth Keat and Ms. Lay Navinn of the Ministry of Industry, Mines and Energy (MIME), Ms. Chuth Leang Vanny of the Ministry of Women's Affairs (MOWA), Mr. Sem Sopha of Cambodian Federation of Employers and Business Associations (CAMFEBA) with the technical support and guidance of Ms. Linda Deelen of the ILO Sub-regional Office for East Asia. The consultants who developed the case studies in this reader are: 6

9 Module 1: Introduction MODULE 1: INTRODUCTION 1.1. Why business associations are important In many countries the reduction in the number of formal jobs and the threat of poverty has forced people to start their own small businesses. Many of these businesses operate in what is called the informal economy and do not receive the kind of services available to formal enterprises: market information, financial services, legal protection etc. An important way for them to overcome this disadvantage is to work together and put in place some kind of self-help organization. Small enterprises are often too weak to compete against bigger competitors. On their own they lack the capacity to protect their interests in the political arena in the presence of more powerful parties. Individual small enterprise do not benefit from the advantages that come with larger combinations of resources. Such advantages include favourable market linkages, different kinds of insurance and specialised staff. Forming an association can help small enterprises to increase the economic strength and social status of each individual entrepreneur and to take full advantage of the power of networking and cooperation. Business associations are voluntary organizations of business people who cooperate to pursue common interests, help and support each other to develop their individual businesses and improve the business environment. Small business associations include: Organizations that support members to develop their production and business activities; Organizations that protect the interest of their members and represent them; Organizations that coordinate and regulate the business activities of the members. Referring to a directive of H.E. the Minister of Commerce, the Ministry of Commerce has printed procedures for the formulation of the constitution of a business association. This enables business associations to formalize their constitution with the Ministry of Commerce. The procedures define business association as follows: An entity of individuals that work in a common business sector or professional area who established an association to pursue their common interests. A business association is an independent, non-political organization that implements activities for the common interest of its members. 7

10 Managing Small Business Associations - Reader 1.2. The purpose of the reader Business associations that represent small enterprises often lack the skills and resources to manage the association properly. Many have sprung up in response to an urgent need, and have had to use improvised solutions to deal with a specific problem or issue. However if associations are to grow into effective bodies, they have to look carefully at all aspects of their organization, and at the challenges they are likely to face. Their leaders will need to develop their management skills and learn from the experience of other organizations. This reader has been designed to help the leaders of new and existing business associations to: Understand the reasons and needs behind establishing an association through identifying the needs and problems of their members; Develop appropriate activities and services for their members; Negotiate with the Government and other bodies and participate in the formulation and implementation of policies affecting their members' interests; Manage their human and financial resources better; Plan strategically so as to expand their association Government and development agencies' interest in business associations The Royal Government of Cambodia has a strong interest in promoting business associations because it considers them crucial for the development of micro, small and medium enterprises. The Government supports small business associations and drafted a decree to encourage small entrepreneurs to establish associations. Development organizations are increasingly recognizing the value of helping business associations reach their maximum effectiveness: It is more cost effective, and therefore more sustainable, to work with one business association rather than with many individual businesses; Business associations help individual businesses learn from one another; By helping a business association, resources are more likely to be shared equally among many businesses rather than benefiting just one or two businesses. The reader can be used in training courses or workshops. A separate Trainer's Guide "Managing Small Business Associations" has been developed for this purpose. 8

11 Module 2: The Nature of Business Associations MODULE 2: THE NATURE OF BUSINESS ASSOCAITIONS 2.1. Reasons for creating a business association Small business associations can serve three main purposes: 1. To support members to develop their production and business activities, i.e.: To provide business development services to small enterprises such as training, advice, consultancy, information and networking services; To develop markets and trade, for instance by organizing a common marketing campaign, providing members with market information or submitting a joint proposal for a large government tender; To share resources for instance by developing a common production facility, or by sharing equipment or facilities. 2. To protect the interests of the members and be their representative, i.e.: To solve a common problem that cannot be dealt with satisfactorily by entrepreneurs acting individually; To defend specific rights or interests of small enterprises; To represent the members in policy formulation and implementation. 3. To coordinate or regulate the business activities of the members, i.e.: To set quality standards in order to improve the marketability of the products produced by the members; To regulate prices to avoid that heavy competition undermines profits; To regulate the production capacity of the member enterprises in order to keep prices stable. There are different ways in which a business association can start up in Cambodia: Enterprises face a common problem or opportunity and decide to start an association to address this problem or opportunity collectively; Associations grow out of a series of exchanges and discussions between people or agencies; A development agency provides the means to organize meetings and discussions, and helps with the start-up costs such as office space or a secretariat; A Government agency gives directions to establish a business association. 9

12 Managing Small Business Associations - Reader Case study: Different ways how a business association can start up The Cambodian Trucking Association (CAMTA) was established on 17 September 2004, with the support of the Ministry of Public Works and Transport. Its main purpose is to give transport companies a clear understanding of the relevant government laws and transport regulations, and to improve cooperation with the government. At present the association has 13 members, jointly owning 600 trucks. The objectives of the association are: 1. To encourage individual transport companies to work together in order to professionalize the services provided to their clients in freedom and independence; 2. To participate in national meetings/conferences and express their opinions relevant to their business; 3. To contribute to the Royal Government's development goal of transport services: security, comfort, quickness and reasonable fees. The association has made significant achievements since its establishment. The members work together sharing the transport services amongst them and gained a market share of 60-70% nation wide, and 80% on National Road No. 4. The Rice Millers Association (RMA) in Banteay Meanchey Province was formed in 1998 with the support of the UNDP Private Sector Promotion Program. At present it has 24 members. The main objectives are: 1. To encourage all members to work together in order to solve common problems and provide mutual support; 2. To pursue the common benefits of its members; 3. To identify local and international markets; 4. To support members accessing financial services; 5. To improve production techniques. The Cambodian Association of Travel Agents (CATA) was created in At present, the association has 119 members, including 17 Korean companies in Siem Reap Province. The main objective of the association is to promote the tourist industry, provide its members with tourism-related information, provide legal counselling services and protect the common interests of the members Different types of business associations There can be various kinds of business associations: Those that are trade-specific (for example the members are all carpenters) Those that are location-specific, comprising enterprises in a particular neighbourhood or area versus national business associations Women-only, men-only or mixed business associations Some small business associations are members of unions or federations at the national level. These unions or federations have a role in lobbying and advocacy at the national level, and they can help small business associations to develop a common position and strategy. Chambers of Commerce are organisations representing the business interests of a certain geographical area. 10

13 Module 2: The Nature Of Business Associations 2.3. Associations of women entrepreneurs It is often useful for women to become members of small business associations or to create their own women business association. In Cambodia there is a saying 'Women cannot move around the cooker' which means that women are not supposed to go anywhere far away from home because of their roles and responsibilities - taking care of family members and looking after the household. Participation in an association enables women to meet regularly, establish business contact and discuss common problems. Within a business association with mixed membership, women are sometimes perceived and treated as inferior to men. When this is the case women are rarely allowed to occupy important posts but often take on responsibilities similar to their domestic chores. Women may lack the confidence to express their opinions in front of male colleagues. In addition, women often have dual obligations looking after their families and children while at the same time having economic responsibilities, like operating a small business. This may mean that women have less time for meetings and other activities of the association. Setting up separate associations for female entrepreneurs may help women to become more confident, and may create better conditions for them to take full advantage of their capacities and resources. Case study: Association of women entrepreneurs in Cambodia The Women's Association for Small and Medium Businesses (WASMB) is the first women business association in Cambodia, established in This association supports business women through: - Networking and solidarity; - Access to a resource center; - Participation in a forum for learning and sharing of experiences; - Promotion of women's rights. WASMB membership is open to all women who (a) have at least one year of work experience, (b) own a formal or informal business or are professionals, and (c) have been nominated or recommended by an existing member. There are two categories of membership: (a) corporate membership, and (b) individual membership. So far WASMB has 35 members from different business sectors. Some of the members represent their company whilst others represent themselves. The WASMB Management Team comprises a president, two vice-presidents, a secretary and a treasurer. The Management Team is elected by the General Assembly. In order to be eligible, a committee member must have been a member in good standing for at least one year with a good reputation. The president serves a three years term. WASMB has received both financial and technical support from the Mekong Private Sector Development Facility, the UNDP and relevant ministries. 11

14 Managing Small Business Associations - Reader 2.4. Understanding social capital "Social capital" is a relatively new concept that has been increasingly studied in recent years. Social capital refers to the non-economic resources of cohesion and mutual support that exist among individuals in a society. We all know that economic capital is an important necessity for a successful business, but it is something that by definition poor people lack. Poor people, however, may have something else of value: considerable networks of support. Hardship may have reinforced mutual reliance and self-help (though on occasion it may also have the reverse effect as people fight each other for access to the meagre resources available). The ability to network with others, to draw on the resources and skills of families and neighbours and to be encouraged by them, amounts to another kind of wealth. On the basis of social capital, structures such as business associations can contribute to the development of economic capital. One of the problems facing the individual small entrepreneur is being alone. When someone works in a large company, there are usually other people around to deal with different aspects of business management. Someone looks after the marketing, someone else sends out the invoices, yet another person takes care of the transport. A small entrepreneur must deal with all of these issues on his or her own. This is difficult if a person's is skilled in one area (e.g. craftsmanship in making a product) but not in others (e.g. marketing the product). In business associations, small entrepreneurs may be able to pool their resources and skills. The individuals who join a business association will at times be competing against each other for customers and supplies. Each entrepreneur will have his or her business strategy that he or she will not want to share with competitors. The business association must tread a fine line. It should encourage members to share ideas and problems but it needs to respect that their members may not want to share everything. Some issues specific to individual businesses may be better discussed on a one-to-one basis in business counselling sessions, with the counsellors themselves signing a confidentiality agreement. 12

15 Module 3: Developing a Small Business Association MODULE 3: DEVELOPING A SMALL BUSINESS ASSOCIATION 3.1 Life cycle of the business association Associations are like human beings: they are born, they grow up, they learn, they work and expand, but they can also face problems, lose their vitality and even die. There are advantages and disadvantages to each of these stages in the development of a small business association. The life cycle of a small business association: Birth Childhood Adolescence Prime of life Maturity Declining vitality leading to either closing down or renewal Birth is when the business association is created. One, or several people, have the idea of forming an organization to deal with common problems. The founders are important in developing the commitment to form an association. Work is voluntary and membership is still very limited. During childhood, activities get off the ground. The association becomes visible to the outside world. There is enthusiasm and commitment from members. At this stage it is important to set the rules and regulations for working together and to ensure that members benefit equally. During the childhood stage, there is scope for conflict since members may not agree on the purpose and ways of working of the association. Good communication is necessary to ensure that members work towards a common goal. In its adolescence, the association still lacks experience and probably makes mistakes. However, many members join at this stage. The association now has to become a professional organisation, meaning that good systems for planning and administration have to be created. New means of communicating with members have to be developed to be able to guarantee 13

16 Managing Small Business Associations - Reader the effective participation of the expanding membership base. By the time it is in the prime of life, the organization has gained sufficient experience. There is much goodwill from its members. It is capable of providing professional services and diversifying its activities. This is the most active and effective stage of the association. When it reaches maturity, the association members may lose their earlier enthusiasm, since there are fewer challenges. Although the association continues to provide services to its members, it may be more difficult to mobilise members' effort and commitment. The association may deal with this challenge by expanding its stakeholder base and establishing constructive partnerships. Decline will either prompt a renewal process or will lead to closure through either: "Aristocracy", when existing leaders are too caught up defending the status quo of their power base and fail to develop new activities or take risks; "Bureaucracy", when rules and regulations become more important than members' interests. Nobody dares to take new initiatives. The organization brings fewer benefits to the members and funding and government support become more difficult. If the association loses the benefits for its members, other organizations may emerge to take its place. "Splitting up" can occur when new members create their own branches or when services become independent Membership strategy Depending on the kind of small business association, it may be important to attract a large number of members or, on the contrary, to concentrate on more active participation by a smaller group of members. Increased numbers can be important when: The business association wants to show the government and partner organizations that it is the major body representing small enterprises; The activities of the association need the advantages of scale; The services of the association are under-utilised by the existing members. Concentrating on quality participation by a smaller group of members is essential when: The viability of the organization depends on everyone carrying out a mutual agreement such as with the common marketing of products; The association wants to maintain stable prices for its members products or services by limiting the number of producers or service providers; The business association wants to protect its members' interests discreetly, and not become a high-profile organization. This could be the case where members already enjoy a preferential treatment that politicians would find difficult to defend if it became a public issue. Case study: Membership strategy The Women's Association for Small and Medium Businesses (WASMB) plans to have as many members as possible so that the association will have a strong voice representing the members and negotiating with other stakeholders. Membership of some of the business groups supported by the Cambodian Association for Informal Economy Development (CAID) is limited. At the Phnom Penh International Airport, 14

17 Module 3: Developing a Small Business Association for example, membership of the group of motorbike drivers is limited to 31 only. All drivers have uniforms and helmets provided by DED (a German Development Organization). The restrictions on membership are made according to customer demand, ensuring that all motorbike drivers have enough customers. The group maintains a standard service fee without competition among the group members. There are a number of possible steps that can be taken to attract new members or to reinforce the commitment of existing members: Incentives, such as small gifts, for existing members who introduce new members; Development of activities for non-members that give them a taste of the advantages of being a business association member; Lower subscription fees for the first year of membership; A logo or sign that members recognize and that creates a feeling of belonging to a group; Free advertising space in the newsletter for new members; Sending information letters to potential members on important issues that affect their business; An orientation programme for new members giving them information on the association's services and products Strategy on federations, unions and networks Many business associations are formed at the local level. In some instances, local business associations realise that a larger membership base, more financial and human resources or more political influence is necessary to respond to the needs of their members. They may see the advantage of collaborating with similar organizations, developing common initiatives. This then can become the basis for forming second level organizations such as federations, unions, and inter-professional organizations. Typical activities of federations and unions, compared to local business associations are: Analyzing private sector policies; Co-ordinating lobbying in the field of macro-economics, regulations, fiscal issues; Organizing exchanges and visits to business associations locally or abroad; Developing international connections; Commissioning sector-specific studies on critical elements of small enterprise development. Federations and unions have some problems that differ from those of business associations: Communication with members is more difficult; There can be contradictory interests between different groups of members; Costs can be higher since there is less voluntary work. Unions and federations are separate legal structures with their own constitutions, general assemblies and management teams. In most cases small business associations are the founding members and send their representatives to work in the unions and federations. In some instances it may not be necessary to set up a separate legal structure, as it may be sufficient to have a looser "network". When member associations of a network decide to launch a common activity, they will generally share responsibilities among the different participating associations. A contribution may be paid to cover common costs. One business association could be the lead agency for the network and co-ordinate network activities. 15

18 Managing Small Business Associations - Reader Case study: Federation, unions and networks The Cambodian Federation of Employers and Business Associations (CAMFEBA) is an autonomous and independent business association registered and recognized by the Cambodian Royal Government. Established in 2000 due to the increasing need for the private sector to stand together with a unified voice, CAMFEBA is the largest association in Cambodia, representing over 700 companies, including small & medium enterprises, leading Cambodian businesses, multinational companies and Cambodia's major business Associations. CAMFEBA's vision is to unify and strengthen the Cambodian Private Sector through effective representation and collaboration with the Royal Government of Cambodia and relevant global bodies. It aims to support its members to compete in the global economy. It's main objectives are: 1. Coordinate the private sector under one unified umbrella; 2. Promote good industrial relations to ensure a harmonious business environment; 3. Represent members where it matters most; 4. Provide advice, build capacity & disseminate information. Members of CAMFEBA are entitled to receive access to services, in particular legal advice and councelling, information on the business and social environment, training and networking both inside and outside the country and representation during bilateral and multi-lateral conferences, with the government and international agencies Growing pains A well managed association is able to expand its activities, attract new members and mobilize additional human and financial resources. The association will develop from an informal stage to that of a formal institution with social and economic responsibilities. During this process, the business association may experience a number of growing pains: New members will want to join the organization, but they may not have the same commitment and dynamism as the initial founders of the organization. Initially the organization may cover only one area or sector, but new members will mean expansion of activities into other areas and sectors. This will make it necessary to create separate committees for each area or sector (for example one committee for metalworking enterprises) and have representatives of these areas and sectors on the Board of Directors. Initially, most of the work will be done by a small group of volunteers. As the organization becomes bigger, professional staff needs to be recruited. Tensions may arise between the staff and the elected leaders as the staff will have more hands-on information and more contacts with members, while the Board of Directors has the decision-making power. As the business association develops different activities, it will be difficult for members, and even for the leaders to keep track of what is happening. Effort is needed to coordinate the different activities and keep members informed, perhaps through a newsletter. As the organization gets bigger, there is less contact between members and leaders. However busy they are, the leaders must keep in touch with reality and understand the interests of the members. As the organization grows, diversified funding becomes more important for the autonomy of the organization. Relying too much on one source of income makes the organization too vulnerable to changes of policy or personnel in the funding organization. A combination of membership fees, fee-based activities and donor funding enables the association to continue its activities independently, based on the priorities of its members and not those of its donors. 16

19 Module 4: The Association Mission Statement and Objectives MODULE 4: THE ASSOCIATION MISSION STATEMENT AND OBJECTIVES 4.1. Vision of the organization: The success of a business association depends on its members having a common vision of what the association stands for. One way to ensure that members share a common goal, is by agreeing on a vision statement. A vision is like a dream, a picture of the ideal conditions for your members. A vision statement is a short phrase or sentence that conveys the members' hopes for the future. Catchy phrases such as "a competitive business sector" or "equal business opportunities for women and men" may be part of a vision statement. The organization's vision may include the following characteristics: Values Challenges to overcome Morality The vision statement should be: Understood and shared by all members Inspiring and motivating Easy to communicate 4.2. Mission statement People in an organization need to be clear about what it is they are all working for. A mission statement is a simple clear set of words that sums up the key purpose of the organization. A mission statement is more specific than a vision statement. It answers the questions: Who are you, as an organization? Why do you exist? What do you do? Whom do you serve? 17

20 Managing Small Business Associations - Reader Some organizations combine their vision and mission statements, while others separate them. The vision element is usually more general, and aims to be motivational. The mission statement tends to be more practical defining the particular group for which the association works and the particular means it will use to meet the challenges of that group. It serves to remind everyone involved of the key focus of the organization. While a vision statement inspires people to dream, a mission statement should inspire them to take action. All the members should be involved in some way in the agreement of what the mission statement should say. 4.3 Setting the objectives Objectives are the specific, measurable steps that will help you to achieve your mission. Before setting the objectives of the business association, the members of the association need to identify their common problems. Once the common problems have been determined, it is easy to formulate the objectives by converting the problems into positive statements. An example: If one of the common problems of rice millers is that they cannot access financial services, one of the objectives of a rice millers association may be "to support members accessing financial services". Another example: If one of the common problems of silk weavers is that they are working with outdated technology, one of the objectives of the silk weavers association may be "to support members to improve their production techniques". The objectives of the business association need to be challenging and relevant to the needs of the members. They need to include the kind of challenges that can not be dealt with by the individual entrepreneur, but that can be tackled by applying the common strength of the group. The objectives of the association may change over time, as the problems faced by the members change. It is important for the leaders of the business association to monitor whether the objectives of the association remain relevant to the members. Case study: Mission statement and objectives CAMFEBA's mission statement is: The Cambodian Federation of Employers and Business Association (CAMFEBA) is an autonomous and independent business association that aims to strengthen the Cambodian private sector and enable its members to compete in the global economy. CAMFEBA's objectives are: 1) Coordinate the private sector under one unified umbrella - Effectively address challenges affecting the welfare and interests of our members and employers in general - Facilitate the effective distribution of updated laws and regulations - Provide networking and relationship building opportunities 18

21 Module 4: The Association Mission Statement and Objectives 2) Promote good industrial relations to ensure a harmonious business environment - Promote an ethical business environment amongst employers and employees - Promote workplace health and safety 3) Represent our members where it matters most - Seek recognition from and establish effective communication with the Royal Government and relevant Ministries - Seek seats on representative national tripartite bodies - Effectively co-ordinate with our union counterparts - Effectively represent the private sector at a regional and international level 4) Provide advice, build capacity & disseminate information - Provide advice, comments and guidelines to government on social and economic policies - Provide relevant training to our members - Provide up to date information on the business and social environment - Provide legal advice and counselling to our members 19

22 Managing Small Business Associations - Reader MODULE 5: THE ASSOCIATION CONSTITUTION 5.1. The constitution A constitution gives an organization its structure and ground rules. It is what the founding members agree will be the nature of the organization, the way decisions are made and the rights and obligations of members and leaders; It provides the basis for any discussion on future expansion of the organization; It provides information to the outside world on how the organization is run; It helps the group gain official registration, if that is required. Most constitutions contain the following information: Name of the association Place and date of establishment Address Mission statement and objectives The nature of the association Founding members Membership is open to.. New members may be admitted by. Rights and obligations of members Roles of the general assembly, management team, and other structures -- and how they are elected How different groups within the organization (such as women, youth, or very small businesses) are to be represented at different levels of the structure (on committees, or working groups) How financial and other material resources are to be structured How profits are to be used or shared Procedures to be followed if the organization is wound up Some of this information may also be included in a separate document containing the Internal Rules and Regulations. For an example of a Constitution, see Annex A. 20

23 Module 5: The Association Constitution 5.2. Rights and obligations of members The rights and obligations of members of the business association are decided by the general assembly (particularly the constituent assembly that decides on the constitution). They should be written into the constitution. Conditions for becoming a member can be very flexible in an open association, or very strict in a closed association. They may include: Operating a specific type of business; Living or working in a specified area or location; Having a certain size of enterprise: e.g. maximum turnover or number of employees. Associations may decide to have different categories of membership, for example: Honorary members could for example be members who have greatly contributed to the business association in the past and do not have to pay membership fee; Active members may be members who actively participate in the work of the association, and who can be elected into the Board; Passive members could be members who pay a lower membership fee than active members. They may have voting rights but no rights to stand for election. Whether or not it is necessary to have different categories of members depends on the size and nature of the association. Obligations of the members may include: Paying an initial contribution for membership registration; Paying a monthly or annual contribution; Attending a minimum (specified) number of meetings; Respecting certain rules of good conduct and honest business practices; Holding certain levels of training or experience. Rights of the members may include: Participating in the decision-making process; Voting in the General Assembly and electing members of the Board or other representative bodies; Benefiting from the services of the organizations on favourable terms; Equal treatment among members. Case study: Rights and obligations of members In order to become a member of the Rice Millers Association in Kampong Cham Province, a rice miller needs to: 1) have a rice mill in the province, 2) operate a business related to rice products, 3) register the business officially. Each member needs to pay 30,000 riels (USD 7) when joining the association. Members need to fulfil their membership tasks and support the association to build its reputation. If a member wants to resign, he or she needs to give official notice one month in advance, and ensure not to be in debt with the association. The association has the right to dismiss members who do not respect the constitution. 21

24 Managing Small Business Associations - Reader MODULE 6: ENCOURAGING PARTICIPATION 6.1. Knowing the members Leaders of associations need regular contacts and discussions with their members. They should keep track of why members join or not join the association and what their expectations are. They should know the answers to the following questions: What are the main reasons for members to join the business association? Which activities or services do the members consider most useful? Is the business association effective in solving the major problems facing the members? Do the members feel that the business association opens up important business - or other kinds of - opportunities for them? What are the main reasons for some enterprises not joining the business association? Entrepreneurs might have different reasons for joining a business association. For some entrepreneurs the possibility to discuss the business environment with similar business owners may be most important. Others may wish to increase turnover in the business through the services that the association provides. Yet other entrepreneurs may be interested in joining a business association that can help facilitating access to credit Facilitating member's participation Consultation with members should be an on-going activity and leaders need to continuously find ways to listen to the members and help them articulate their concerns. Even before the organization is created, there needs to be a thorough process of talking with the target membership. Small entrepreneurs will join a business association when they feel that the organization is committed to working towards solving their problems and creating new opportunities for them. They will participate actively in the association if they feel that their leaders: Listen to them; Let them participate in the decision-making process; Count on them to develop activities to help achieve the organization's common objectives; and Give equal treatment to all categories of members: bigger/smaller, town-based/ruralbased, domestic/foreign, male/female. The business association can facilitate its members' participation in different ways: Creating a local committee in each area or sub-sector to discuss particular problems; Forming a working group to study a particular problem and propose decisions to the Board; Organizing conferences and debates on interesting topics; Facilitating members to bring up new ideas and supporting them to implement these ideas. Activities that will involve members and strengthen the association include: 22

25 Module 6: Encouraging Participation Creating and distributing a directory of members: this will help the members to get to know each other and it can also serve to advertise their businesses; Publishing a newsletter: this will give members up-date information on developments in the organization, community and industry and will serve as a marketing tool to non-members; Organizing bazaars or trade fairs to promote members' products to new customers; Working with other associations, for example, to organize a trade fair or get them to feature your organization in their publications; Organizing meetings with other entrepreneurs and associations to expand the association's influence as well as providing a marketing opportunity for members; Where internet facilities exist, establishing an e-net forum to facilitate member's discussion on matters relating to the association and to members' interests. Business associations may need to have specific policies with respect to members at different stages of involvement: existing, potential, active and inactive. The association should follow up on inactive members and find out the reasons for their lack of participation. This will improve the commitment of future members. The members of the Board will have a higher level of responsibility than normal members and should be given a corresponding level of support and assistance. They should however be seen to observe the common obligations of all members and be transparent in the exercise of their powers Women in business associations Women and men sometimes face different problems as entrepreneurs and may therefore need the business association to provide some specific services. There are some issues to consider when facilitating women's participation in the organization: In most business associations with mixed membership, women rarely occupy important posts such as president or vice-president. It is important to realise that both women and men have significant contributions to make to an association and bring different values to the association. Therefore it is important that women take up more important positions. Women may find it hard to express their opinions before their male colleagues. It can therefore be a good idea to organize separate discussion groups for women and for men so that ideas can be worked through confidently and without interruption. A representative of each group can present the ideas to a plenary session. A women's committee could be established within the business association to discuss the problems of women entrepreneurs and develop practical solutions such as childcare. 23

26 Managing Small Business Associations - Reader When involving women in decision-making, the business association should organise meetings at times and at a place that take into account their family obligations. Men might be more available at the end of the afternoon whereas women often (as is still the case in most households in Cambodia) are preparing the family meal along with other work in the home. The agenda of the business association should include women's issues such as childcare, security, and how to combine the development of the woman's enterprise with her obligations to her family. These issues should be regarded as important and not dropped to the end of the agenda. Special forums and workshops could also be organised. Since women's rates of illiteracy are higher than men's, the business association may need to ensure oral communication is a major means of discussion of issues. Training programmes and similar activities should also not rely inappropriately on written materials. At the same time literacy should be encouraged through programmes either run by the business association or by linking to government or NGO literacy programmes. The involvement of women in business makes good economic sense but may cause resistance among men who have to adjust to a different understanding of male roles than in their father's time. It may be useful for the business association to facilitate a men's group to discuss these issues. Case study: Women in business associations The Small and Medium Industry Association in Phnom Penh has 102 members, out of which 16 are female. These female members face a number of constraints caused by gender inequality in the Cambodian society. They often find it hard to establish contacts with other businesses or with potential clients. They also feel that other business operators tend to devalue their capacity, including the male members within their association. Women entrepreneurs often have to cope with pressure within the family. In many cases, their husbands make decisions without asking their wives, but expect their wives to do the opposite. 24